The latest LRET deal was struck by the Coalition’s wind industry front men, Ian “Macca” Macfarlane and his youthful ward, Gregory Hunt for no other purpose than saving their mates at Infigen, Vestas & Co – and is doomed to fail, in any event (see our posts here and here).

With that phenomenal cost being added to already spiralling power bills – there will be many more households who will be unable to afford power; adding to the tens of thousands of homes already deprived of what was once a basic necessity of (a decent) life. And thousands more destined to suffer “energy poverty” as they find themselves forced to choose between heating (or cooling) and eating:

If our political betters in Canberra don’t get a grip and line up to kill the LRET very soon – in less than a decade – Australia will have created an entrenched energy underclass, dividing Australian society into energy “haves” and “have-nots”.

There’s something deeply troubling about thousands of Australian households descending into gloom after dark – unable to afford the power needed for electric lighting; or troubling, at least, for those with a social conscience.

The ONLY justification for the massive stream of subsidies filched from power consumers and directed to wind power outfits is the claim that wind power reduces CO2 emissions in the electricity sector and, therefore, provides a solution to climate change (or what used to be called “global warming”). The former proposition is a proven fallacy (seeour post here). And, because the planet hasn’t reached boiling point (in bitter defiance of the IPCC’s models), the once concrete relationship between CO2 emissions and increasing global temperature now seems murky, at best.

Claiming the “global warming” moral high ground, wind power proponents continue to blindly chant the mantra that wind power reduces CO2 emissions – although they rarely, if ever, talk about the actual cost of the claimed reductions. Probably because there are, in fact, no reductions.

STT has focused on the fact that industrial scale wind power does not – and will never – reduce CO2 emissions simply because it is intermittent; being delivered at crazy, random intervals, such that 100% of its capacity must be backed up 100% of the time by fossil fuel generation sources (see our post here). Accordingly, we call it an environmental fraud.

Because wind power fails to deliver on its primary claim (and the wind industry’s only reason for existence) the $billions in subsidies purloined from taxpayers and power consumers have been received on an utterly false premise. Accordingly, we call it an economic fraud. Wind power, whichever way you slice it, is not, and will never be, a meaningful power generation source.

With that in mind, power consumers and taxpayers are clearly entitled to ask whether the subsidies received by wind power generators represent a cost-effective means of reducing CO2 emissions; if, indeed, there is any such reduction at all.

One such group is the Association for Research of Renewable Energy in Australia (ARREA): a band of hard-hitting, pro-farming and pro-community advocates, with a mission to ensure Australia gets the sensible energy policy it needs. Rather than the present policy fiasco, foisted on power consumers and rural communities by eco-fascist nutjobs – that wouldn’t know the first thing about markets and/or power generation – and the rent-seekers from the wind industry and its parasites that profit from the useful idiots they pay handsomely to run cover on their behalf: like yes2-ruining-us, GetUp!, the Climate Speculator and ruin-economy.

On that score, ARREA went hell-for-leather in an effort to put some of the real facts before the Senate Inquiry into the great wind power fraud.

ARREA lobbed a cracking submission before the Committee – available here: sub372_ARREA

In its submission ARREA has a very solid crack at the most colossal industry subsidy scheme in the history of the Commonwealth; and the fact that, despite the ridiculous cost of the LRET (originally set up as a $3.8 billion a year subsidy for wind power – but – under the latest 33,000 GWh target – a mere ‘snip’ at $3 billion annually), there has never been any cost/benefit analysis of the policy in its 15 years of operation.

ARREA also takes a well-aimed swipe at the ludicrous claims by the wind industry that each and every MWh of wind power dispatched to the grid results in the abatement (or reduction) of 1 tonne of CO2 gas in the electricity generation sector.

It’s that relationship that is said to justify – what Greg Hunt calls – the “massive $93 per tonne carbon tax” imposed on all Australian power consumers under the LRET (see our post here).

Under the LRET, a REC is issued for each MWh of wind power dispatched to the grid, on the assumption that it in fact reduces or abates 1 tonne of CO2, that would otherwise be emitted by a conventional generator. The figure of $93 talked about by Hunt as a 1 “tonne carbon tax” is the full cost of a REC, that will be reached when the shortfall penalty starts to apply: the full cost of the REC is added to retail power bills.

STT hears that young Greg has taken to arguing that there is no such assumption: his argument appears to be that a REC is issued for a MWh of wind power, irrespective of whether any CO2 is abated elsewhere in the electricity sector; which simply begs the question as to what Australians are getting for their $93 per MWh electricity tax? Hmmm …

ARREA’s submission also picks up on the work done by Dr Joseph Wheatley, a graduate of Trinity College Dublin with a PhD in condensed matter physics from Princeton University:

McGUINESS, Mr Sam, Member, Association for Research of Renewable Energy in Australia Ltd

CHAIR: Welcome. Could you please confirm that the information on parliamentary privilege and the protection of witnesses and evidence has been provided to you?

Mr Bucknell: Yes.

Mr Glover: Yes.

Mr McGuiness: Yes.

CHAIR: The committee has your submission. I invite you to make a brief opening statement. At the conclusion of your remarks, I will invite members of the committee to put questions to you.

Mr Bucknell: Thank you. First I congratulate you on the conduct of this inquiry. We have been engaged observers at public hearings and have intently followed your progress, including the interim report and the wind turbine commissioner proposal. Your work here will last on the public record and be proven over time to have added a great deal to the public understanding around wind turbines and their relative value or otherwise. In our view, you have covered the detail and the terms of reference items with one major exception, and that is why we are here today.

The ARREA submission directly addresses that missing point, which is the economic impact of wind turbines, including the associated matters on how effective the Clean Energy Regulator has been, the adequacy of monitoring, the energy and emission input and output equations and related matters. This issue is fundamental. It goes to the very heart of what the Renewable Energy (Electricity) Act 2000, the act, is supposed to be doing. Specifically, if the second object of the act, reducing greenhouse gas emissions, and the third object being ecologically sustainable are to be met, the encouragement of additional generation, which is the first object, must be achieved by displacing thermal production. In order to assess the economic impact, historical performance data is crucial and a fundamental benchmark. Under the current regime adopted by the CER, it appears that no real effort has been made to verify the claims by the wind industry as to the actual performance of wind turbines as they relate to the fundamental task of reducing greenhouse gases in the electricity sector.

This is why we, ARREA, commissioned the Wheatley study to independently investigate the effectiveness of wind power in reducing greenhouse gas emissions from electricity generation in Australia during 2014, using actual empirical five-minute data from each of the grid-connected generators. We were at the Joe Wheatley teleconference you held in Canberra. We are not here to revisit the technical detail. That is why we and you got the expert in. However, we are here to focus on the outcome, to connect the dots, to explain why this is important to the terms of reference and your final report recommendations.

As a headline reminder, analysis of the actual data in the NEM in 2014 shows that wind power production has overstated the emission reductions by 22 per cent—that is, 100 per cent minus 78. It is 22 per cent overstated. This percentage will continue to increase as the percentage of wind power entering the NEM increases. The current lack of performance measurement is just not acceptable. It would not be tolerated in any other industry, let alone one reliant on mandated subsidies. It should not be up to entities like ARREA to commission this independent research. Performance measurement should be a fundamental and first step in any oversight regime, particularly where taxpayers’ funds and electricity consumers are involved. The CER should have independently commissioned this research, or the Senate, or perhaps in the future the wind turbine commissioner. The CER should be admonished for this failure to properly monitor the true impact of an industry which comes at a high cost to the nation’s economy and electricity consumers in particular.

Many are asking: is this regulator asleep at the wheel? Do we have another HIH royal commission occurring here? Or do they already have the information but are not releasing it? Senators should be concerned about the impact that this lack of measurement has on the CER fulfilling its responsibilities under the act and regulation. There are financial flow-on impacts to electricity consumers and in respect of public moneys received by inappropriately issued RECs. The issue of CER’s effectiveness exists regardless of your political views, regardless of whether you like or dislike wind turbines and regardless of the environmental and social impact issues. This is a public accountability issue. We are urging all to make a joint recommendation on this matter, and that involves an audit of the CER.

In 2014 electricity consumers effectively paid wind farms $100 for emissions reduction and they got only $78 worth of value. The dollar value of these certificates that did not lead to a reduction in emissions was estimated at $70 million in 2014 alone. What is more, it will get worse year by year as more turbines are installed. This 22 per cent or $70 million in ineffective wind production is not ecologically sustainable as defined by the act. The act’s definition of ‘ecologically sustainable’ includes ‘promoting improved valuation, pricing and incentive mechanisms’. That is the act’s definition. Including the 22 per cent ineffective wind production is clearly not consistent with this principle. In particular, it clearly distorts valuation and pricing and creates unjustified incentives. Under regulation 15A(a) electricity omitted from this calculation includes ‘electricity that was generated by using an eligible renewable energy source that is not ecologically sustainable’. Let me restate that: electricity produced by a wind turbine that is not ecologically sustainable cannot be counted. They cannot issue RECs for it.

The approach taken above is what parliament intended for regulation 15A(a). The issue was also the core of the amending act—the Renewable Energy (Electricity) Amendment Act 2006—with the explanatory statement saying that it would:

… enhance market transparency and improve business certainty, provide increased opportunities for solar and bioenergy technologies, and improve the operational effectiveness and efficiency of the Act.

The Wheatley research has now clearly established using the actual empirical 2014 data that 22 per cent of the electricity generated by wind as the eligible renewable energy source in 2014 was not ecologically sustainable and should not have received RECs.

No-one likes being ripped off, but what is worse is when the gatekeeper, the regulator, the CER, is complicit or is turning a blind eye. Please do not add insult to injury to your electors by ignoring this problem, which is only set to get worse. Senator Back has repeatedly asked the CER for details on regulation 15A(a). The CER has responded to those questions, including on notice, with answers relating to other regulations, including regulation 15A and 15A(b). They have tried to answer using ineligible energy sources, which is regulation 15 and not relevant to the question asked. It appears as though the CER is avoiding answering the question or making up its own legislative rules.

ARREA believes renewable energy is very important for the sustainability of Australia’s future. However, the current policy settings in regard to wind turbines are flawed. Their implementation has led to systemic failure. The simple production of electricity from wind, subsidised or otherwise, to the extent that it does not effectively offset thermal production does not serve any material economic purpose. It duplicates electricity production, distorts market signals, especially compared to other renewable energy sources such as solar, and leads to inappropriate public perceptions about the value of wind power, to the detriment of the long-term sustainability of our nation.

Our recommendations as per our report stand, and those recommendations are that this committee:

Receive the full Phase 1 report—CO2 Emissions Savings from Wind Power in the National Electricity Market (NEM), by Dr Joseph Wheatley, Biospherica Risk Ltd, Ireland.

Obtain an assurance from the CER that nominated persons—the wind energy companies—will be advised of the need to apply, consistent with the Act and its regulations, a 0.78:1 relationship when issuing certificates.

Confirm that the Regulator will use its powers under the Act, including Part 15A Civil Penalty Orders and/or Enforceable Undertaking under S15B, to uphold the purposes of the Act.

Seek that the Australian National Audit Office (ANAO), conduct a performance audit on the CER’s compliance with its role under the legislation. In particular:

What information did the CER hold on wind effectiveness in offsetting CO2 emissions at both 30 June 2014 (end of financial year) and 3 May 2015?

What Risk Management and Fraud Mitigation practices and processes are in place, have they been appropriate? If not, who should be held responsible and what rectification actions is required.

If all public monies collected in respect of the Act are appropriate.

If there are financial or other incentives, including but not limited to, the collection of public monies under the Act that are distorting the CER’s role in achieving the Objects of the Act.

If the expenditure of public monies by the CER has been appropriately focused on achieving the Acts objects.

CHAIR: Thank you, Mr Bucknell.

Senator LEYONHJELM: I read your report yesterday, at the end of 550 other pages.

Mr Bucknell: Thank you, Senator.

Senator LEYONHJELM: If my questions were answered in your submission, that is the reason: it has gone in one eye and out the other. I assume the 0.78 ratio which I think you mentioned is attributable to spinning reserve. Is it?

Mr Glover: Can I just answer that one. The Wheatley report basically showed that wind power supplied 4½ per cent of system demand in 2014 but only reduced CO2 emissions by 3½ per cent. Wind power generation is intermittent; in fact, in Australia it fails completely over 100 times a year. The grid must supply sufficient power at all times, and therefore, when the wind is blowing, backup power must be available at all times. In practice, a significant fraction of South Australia’s wind power displaces low-emissions gas generation within South Australia, and in fact in New South Wales we are importing power from South Australia and it is displacing black coal. The dirtiest power of all is brown coal. That is not being displaced at all by wind power generation.

Senator LEYONHJELM: Yes, but the explanation for the 0.78 is this backup that you are referring to?

Mr Glover: He did not measure spinning reserves or cycling. That is not even included in that. In fact, if we go forward, if we can get more data—in the back of Wheatley’s report he lists his requirements—I think that 22 per cent inefficiency will actually become greater, because that was not measured.

Mr Bucknell: If your direct question is in relation to 0.78, 0.45 production by wind only offsets 0.35 in emissions. If you divide one by the other, you get 0.78.

Senator LEYONHJELM: Have you compared that to solar, geothermal and hydro?

Mr Glover: We have not done the studies there. To an extent, what solar is actually doing is reducing demand on the grid. Households that are running on solar reduce the total demand on the grid, so it is a lot harder to measure, because we do not know how much solar is being produced at any one point in time.

Senator LEYONHJELM: I was talking about large-scale solar.

Mr Glover: No, we have not scoped that.

Senator LEYONHJELM: Are you confident that the ANAO is the appropriate organisation to investigate the performance of the Clean Energy Regulator? My impression is that it is primarily concerned with accuracy of financial accounts.

Mr Bucknell: That is correct. There are two types of audits: there are financial accounts audits and there are performance audits. The audit that we are asking for is an audit of the correspondence that is held within the CER, particularly in relation to regulation 15A(a). Why have we got to the point we have got to? Why is this 22 per cent currently being counted? Why is it currently a one to one relationship? When RECs are issued, there are public moneys that are received by the CER, so it is a financial and a performance issue. We think the ANAO is set up to do those types of audits. This is not an unusual request; it is simply a request for an audit.

Senator URQUHART: Thanks very much, Mr Bucknell. How many members does ARREA have?

Mr Bucknell: Seven.

Senator URQUHART: How do you go about becoming a member? I have looked for you on the internet. I cannot find a street address, a website or a Facebook page, so how do you—

Mr Bucknell: We are a public company that has been registered for a number of years. In fact, I can give you some details on that. You are offered membership by the organisation, and we are on the public record.

Senator URQUHART: Okay, but you do not have a website, a street address or a Facebook page? I have not been able to find any.

Mr Bucknell: No.

Senator URQUHART: Can you describe the structure of your organisation. Who are the key personnel?

Mr Bucknell: The three directors are on the public record. We have seven members, as we have described. We are an organisation who are most concerned about ensuring that renewable energy in Australia and the decarbonisation of the Australian economy are done in the most efficient and effective way. That is why we have raised funds to have the Wheatley research done.

Senator URQUHART: I understand that spokespeople for your organisation are Tony Hodgson and Rod Pahl—is that correct? And they were also spokespeople for an opponent wind group called Friends of Collector—is that right?

Mr Bucknell: I understand that to be correct.

Senator URQUHART: You said that you have not received any research grants and that you raised that money yourselves through your organisation.

Mr Bucknell: That is correct. These are privately raised funds. As I said in my opening statement, we think this is research that should have been done independently by the CER or by the Senate. Public moneys should have been used and, in our view, they should be admonished for the fact that they have not done that research, because it is required in order for them to be able to know how many certificates should be issued underneath the act.

Senator URQUHART: Do any of the key office holders within your association have any research qualifications?

Mr Glover: No, I do not think so. We have a number of people in the organisation with a number of different skills. I am actually a qualified geologist, so I have a scientific background. Mr Bucknell used to work for APRA, so he knows how the regulators work. I was also the Australian country treasurer for the Bank of America Merrill Lynch for over 10 years, so I have a strong background in banking. We have backgrounds in PR, economists and stuff like that who are all members. It is a broad background.

Mr McGuiness: I have been a farmer for 29 years and I have dealt with parasites most of that time, so I am pretty well qualified in this area too.

Senator URQUHART: I presume you mean parasites on the backs of sheep or cattle.

Mr McGuiness: Just all parasites. There are an awful lot.

Senator URQUHART: Aside from the work that you commissioned Joseph Wheatley to do, what other research have ARREA undertaken? Have you undertaken any other research or is it just the work that you commissioned Joe Wheatley to do?

Mr McGuiness: That is the only commissioned work that we have done so far. There are other works to do with waste to energy. Part of our group is looking into stand-alone solar as well, especially in regional areas.

Senator URQUHART: You are looking at doing some research into that?

Mr McGuiness: Absolutely.

Mr Bucknell: And we made a submission in relation to the review of the renewable energy target.

Senator URQUHART: Thank you very much.

CHAIR: Gentlemen, in order to accurately measure CO2 abatement going forward and the concerns that you have raised, what additional data and resources are required, do you believe?

Mr Glover: The Wheatley report, as I said earlier, omitted start-up and power plant cycling. CO2 emissions were not calculated for power stations not despatching electricity to the grid. Most coal fired power stations are at their most efficient when running at 100 per cent capacity. As this capacity is reduced, CO2 emissions per megawatt hour rise. If this reduction in capacity is due to wind power generation entering the grid, this increase in CO2 inefficiency needs to be measured. The input data needs to be improved with actual fuel use data by individual generators at short time intervals, preferably five-minute time intervals. An emissions parameter for individual generators is required to include zero load energy consumption data, that is when they are not producing, incremental heat rate slopes—this is starting to get into the engineering side—start-up energy costs and thermal relaxation times. Obviously, if you shut a power station down because wind power comes on, the coal is still burning, the heat has to dissipate out of that power station and CO2 is still being produced.

This data will help measure efficiency of generators at different capacity points, as well as measure CO2 emissions when these generators are not supplying electricity. In many cases these coal fired power stations are on standby, where they are burning coal but not supplying electricity—in essence, waiting for the wind to drop. As we have stated, there have been other reports done that I think show the whole wind power fleet in Australia switches off 130 times a year. The other thing required is: both ‘sent out’ data and ‘as generated’ data are needed for each generator. ‘As generated’ data basically includes the power used in the generation process, whereas ‘sent out’ is the actual power delivered to the grid. Obviously, there is a certain amount of electricity used within the plant; that needs to be picked up as well.

We are proposing that a detailed multi-year CO2 abatement study is needed to reduce the statistical uncertainty and provide clear information about the variability of wind power effectiveness. I suppose really what we are suggesting is that the Clean Energy Regulator would probably need to create a full-time position to properly calculate these CO2 emissions. The computing power is there to do it on a five-minute basis, if we can get the real fuel feed in data and all the other engineering data for each generator. I think it is probably a full-time job for one person.

Mr McGuiness: What happens is: to start a coal fired power station, they might use up to 35,000 or 40,000 litres of diesel to get it up to an operating temperature. This is a small one—say, a 150 megawatt one. When you get it up to temperature—and I will use an example of one that I know a little bit about in the Hunter—that consumes 80 tonnes per hour of coal to keep it ticking along. It might not be generating any electricity, but you cannot stop feeding it coal. They have to have a thermal efficiency where they do not crack and heat and cool down; otherwise they break. Then it gets a bit complicated. You have thermal reserve, where it is hot and generating a small amount of steam. It uses a thermal generator. Then you have spinning reserve, where it is spinning, and then you have spinning reserve that is synchronised to the grid. Basically you just dump the clutch and she is jamming sparks into the grid. All of those have to stay warm the whole time. You only shut a big thermal generator down if you have a breakdown or a maintenance schedule. These people are scheduled generators. They schedule into the grid to supply electricity 12 to 18 months ahead of when they actually generate. When wind comes into the system, they pull down—but only for a very short period of time. They have to be sitting there so, if something happens, that spinning reserve is ready to drop into the grid.

So there are thermal reserves and spinning reserves. The emissions on those, because they are not generating into the grid at the time, are not necessarily calculated. If we got the correct data and the government did the correct job and got their legislation so it worked, rather than nice and fluffy at the moment, you would get some real evidence of what is going on—and then you would be fair dinkum about getting results.

Mr Glover: Interestingly, under the last carbon tax regime, you only paid a carbon tax when you were supplying electricity to the grid. There was no carbon tax charged if you just happened to be burning coal and not supplying electricity.

Senator DAY: Could you just elaborate further, Mr Bucknell, on the difference between ecologically sustainable wind turbines and non-ecologically sustainable ones?

Mr Bucknell: Absolutely. I think this does go to the heart of a number of questions asked in relation to regulation 15 and regulation 15A. Regulation 15, which is how the CER answered the question on 15AA, relates to eligible and not eligible energy sources. For the record, wind farms do only use eligible renewable energy sources under the act, by definition, but it is not relevant to the question. They do not use any ineligible energy sources, but it is not relevant to the question of reg 15AA. Reg 15AA excludes electricity produced by a wind farm that is not ecologically sustainable. That is why the 22 per cent in 2014, and an increasing percentage in future years to probably 30-plus per cent, is not ecologically sustainable.

Perhaps I could just run through that a bit more clearly for you, if I can. ‘Ecologically sustainable’ is defined in the act. It means an action that is consistent with the following principles of ecologically sustainable development:

Decision-making processes should effectively integrate both long-term and short-term economic, environmental, social and equitable considerations.

That is point a). And then it goes on to b), which is irreversible environmental damage—not relevant. It goes on to intergenerational equity, which is not particularly relevant, and the conservation of biological diversity, which is not particularly relevant. But point e) is:

improved valuation, pricing and incentive mechanisms should be promoted.

Actions that improve valuation, pricing and incentive mechanisms are ecologically sustainable. Excluding the 22 per cent is ecologically sustainable. It is defined in the act. We just want them to do it.

CHAIR: There being no further questions, we thank you for your appearance here today before the committee.